1. Field of Invention
This invention relates generally to a financial transaction system and method, and more particularly to a computerized bill payment system for use in a wire or wireless network which requires a minimal amount of user interaction to affect bill payment.
2. Description of the Related Prior Art
In its crudest form, the bill payment transaction cycle includes the following steps: (a) generation of a bill by a biller; (b) mailing the bill to the client; (c) client writing a cheque for the invoiced amount and mailing the cheque along with a remittance slip to the biller; (d) biller manually depositing cheque in their bank account; (e) when cheque clears (i.e. physically sending the cheque to the client's bank and sufficient funds in client's bank account being identified and debited), biller crediting client's account. The process described above is paper intensive and administratively burdensome, not to mention the fact it often required to be done for multiple billers at least monthly. In addition, the client must absorb the cost of the postage for mailing the cheques. Paper cheque processing also entails significant costs to the payees who receive and handle the client's cheques.
It will be understood by those in the art, that there have been attempts to semi-automate the bill payment transaction cycle. As a service to client's, some banks have made arrangements with designated payees to accept payment of invoices received in the mail by bank clients directly through the bank. A client can bring their mailed bill to the bank and have a teller process the bill by debiting the clients account and processing a credit to the biller which may be deposited in a biller's account with the bank or electronically transferred to an account in another bank used by the biller. The electronic transfer typically takes place over a data network interconnecting the two financial institutions. The remittance slip received from the client is then mailed to the biller, so that it can be reconciled with the mailed invoice. Alternately, the client can use an automated teller machine (ATM™) to deposit the remittance slip associated with the bill, and dictate the account from which the billed amount is to be debited with the remainder of the steps in the bill payment transaction being as described above. Any ATM™ of the client's bank can be used to facilitate payment, allowing the client to choose the most geographically convenient location to initiate the bill payment. However, regardless of the ATM chosen, the client must physically travel to the ATM to make payment. Further, the mailing of a hard copy of the bill is not avoided, nor is the handling of a remittance slip by the bank. Additionally, the service is restricted to client's of a particular financial institution offering such a bill payment service.
The prior art is replete with attempts to fully automate the bill payment transaction cycle. In U.S. Pat. No. 5,383,113 issued on Jan. 17, 1995 and owned by Checkfree Corporation, for example, there is disclosed a computerized payment system through which a consumer may instruct a server by telephone, computer terminal or other telecommunications device to pay bills without having to write a cheque. In this system, a bill is received from a merchant in hard copy form and the consumer is able to make payment to the merchant through a centralized server resident on a network. The payment system allows a consumer to establish a list of merchants to be paid, along with details regarding the financial institution from which funds are to be drawn for payment. To affect payment, a consumer simply contacts the server and enters payment instructions. Debiting and crediting of payments from financial institutions and merchants respectively is then facilitated by electronic funds transfer or paper cheque. In this system, bill information is not uploaded to the server. The server simply has a merchant list and associated user account information from which it coordinates payment. This automated clearing house model for bill payment provides a universal bill payment system that works regardless of the consumer's financial institution. However, it does not completely eliminate the generation of hard copies of bills from merchants or the processing of paper cheques for merchant payment. Further, in order to facilitate payment, the consumer must navigate through lengthy menus, making appropriate entries in the process.
U.S. Pat. No. 5,699,528 issued on Dec. 16, 1997 and owned by MasterCard International Inc., offers another example of an automated bill payment system. In this patent there is disclosed a bill delivery and payment system which allows users to access a server via the Internet to facilitate bill payment. Using a personal computer, a user can view bill information and instruct the server regarding payment instructions. Bill information is uploaded from billers to the server for display to users. After a user has entered payment information the users bank account is debited and the biller is credited automatically.
In an alternate embodiment, without visiting the server, users are provided with electronic bills containing bill information via e-mail from the server. Users are able to facilitate payment by responding to the e-mail with payment instructions. In order to manipulate and respond to electronic bills, users are required to install software in the form of a bill payment program on their home computer. The software provides menus which allow the user to view and/or pay bills, view confirmation of bill payments or view administrative messages. The program can also prompt the user that there are unopened or unpaid bills.
Although this system works adequately, it has several drawbacks. In hard copy form, billers often include advertisements as a revenue generation scheme. In the above system, whether bills are presented to a user on the server or the bills are e-mailed, the advertisements and with it the potential for increased revenue. Further, bill information is uploaded to the server which serves to create a security risk which includes making confidential client information available to a third party. In addition, there are increased operational costs associated with database maintenance and the necessary updating which is required to pass payment information to and from the server. Finally, the user is required to install and navigate through the systems proprietary software to facilitate payment, a cumbersome process involving multiple steps.
Accordingly, there is a need for a bill payment system which: (a) is fully automated; (b) requires minimal user interaction to facilitate bill payment; (c) is secure, requiring minimal transmission of confidential user account or personal information, and (d) allows billers to market additional services.